Everyone deserves a home they can afford.
However, as the cost of housing rises, many of us are forced to pay more than we can really afford. And even if you and your family have a home you afford, others do not.
“Affordable Housing” is a term that conjures up many meanings depending on your background, life experiences, and position in the world. While there are various metrics and formulas used by governments, developers, and advocacy groups, at its core, affordable housing means that the people living a home can afford to pay housing-related costs alongside their other bills. No matter what your income is, if you are struggling to make your rent or mortgage payment, your housing is likely not affordable to you.
Because government funding programs and others need specific measures to target specific groups, the US Department of Housing and Urban Development (HUD) uses a measure called “cost burden” to determine when a household is likely having trouble affording their housing. If you spend more than 30% of your household’s income on your rent/mortgage and utilities, you are considered cost burdened. If you spend more than 50% of your household’s income on those bills, you are considered severely cost burdened.
While people at any income level can be cost burdened, most affordable housing programs target their resources at lower-income households. These incomes are measured by Area Median Income, or AMI. Most federal and state funding programs target households with incomes at or below 60% AMI.
Affordable housing is not the same as public housing. Public housing is a specific program administered by local housing authorities to provide homes to the lowest income residents (generally below 30% AMI). Affordable housing is a wider system of subsidized and unsubsidized homes at affordable prices to lower-income households. Sometimes this is due to capital funds given to new construction projects that promise to keep rents lower, equity derived from Low Income Housing Tax Credits, or property tax abatements and reductions offered by local governments. Other times, this happens through the use of rental assistance vouchers that help pay the difference between the rent a household can afford to pay and the price set by the landlord. Regardless of the specifics, affordable housing is meant to provide safe, healthy, and secure homes.
Policy Recommendations - DeKalb
- Creation of a designated Chief Housing Officer who can educate communities and community council members on housing options and draft policies around housing including developer incentives. Additionally, this role can help navigate developers through the process and ensure properties are being developed and executed according to the program.
- Inclusionary zoning as part of the zoning code.
- This should extend to both rentals and for-sale properties.
- Potential to target IZ to overlays and TOD sites.
- Phased property tax abatements for affordable housing developments.
- Maintenance of existing, naturally-occurring affordable housing through rehabilitation.
- Blight remediation program that includes a 1:1 ratio of properties removed to affordable properties built.
- Creation of a community land bank to aide in property rehabilitation and down-payment assistance program.
- Requirement that all subsidized properties accepts all forms of payments.
- Creation of a housing trust fund.
- Funds applied to trust fund can include
- Delinquent tax fees
- Dedicated portion of millage
- In lieu fees
- Real estate transfer tax
- Funds applied to trust fund can include
- Incentives for developers:
- Priority permitting approval, i.e., review within 21 days
- Major project status/one-stop shop for county departmental reviews
- Density bonuses
- Further reduced parking minimums
- Option for transfer of development rights
- In lieu funds in place of IZ for multi-family housing that does not include affordable.
- County land swaps
Frequently Asked Questions
In the United States, the term affordable housing is used to describe housing, both rental homes and owner-occupied, that is affordable no matter what one’s income is. The U.S. government regards housing costs at or below 30% of one’s income to be affordable.
Costs for mortgage, utility, taxes, interest, and insurance should be no more than 38% of one’s gross monthly income for housing ownership to be considered affordable. So, issues of housing affordability are a matter of comparing the costs of available housing in an area with the incomes of the population of that area. Good housing policy would produce housing priced in the range of affordability for the area population.
Generally, the housing needs of upper income levels are met by market factors. Building homes for affluent families can be very profitable. Affordable housing programs are needed to assure that “low” or “very low” income individuals and families have a place to live. According to the U.S. Department of Housing and Urban Development (HUD), low income persons earn less than 80% of an area’s median income. Very low income persons earn 50% or less of an area’s median income.
More people than you might realize. The economic expansion of the 1990s obscured certain trends and statistics that point to an increased, not decreased, need for affordable housing. Families who pay more than 30 percent of their income for housing are considered cost burdened. These families may have difficulty affording necessities such as food, clothing, transportation, and medical care. An estimated 12 million renter and homeowner households now pay more than 50 percent of their annual incomes for housing.
The simple truth is family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States.
The lack of affordable housing is a significant hardship for low-income households preventing people from meeting their other basic needs, such as nutrition and healthcare, or saving for their future and that of their families.
People who need affordable housing often cannot voice their support for more housing because they fear stigmatization or do not have the time to support housing developments. They need the vocal support of friends, neighbors, organizations, and other members of the community to ensure that housing remains affordable.
Everyone deserves affordable housing. However, as the cost of housing rises, many of us are forced to pay more than we can really afford. And even if you and your family have a home you afford, others do not. People you rely on all the time – teachers, bank tellers, police officers, waiters, fast food clerks, dry cleaner employees, secretaries, nurses, firefighters, and even many young professionals – may need assistance with housing. Someone we know – a relative or friend – or perhaps you yourself may be impacted by the scarcity or cost of housing. Rising housing costs are a concern for everyone for the following reasons:
- Over the last 10 years, the largest job growth occurred in the service and retail trade sectors. Service, retail trade, and agriculture jobs on average pay much lower than other job sectors.
- Over the last 10 years, housing costs have significantly outpaced the increase in wages.
- Companies in the area rely on a mix of workers earning different levels of income. Without these workers, the companies could not afford to operate and would have to move elsewhere.
- People who cannot afford local housing costs are forced to commute from outlying communities which (1) exacerbates traffic congestion and air quality problem due to long commutes; (2) decreases dollars spent in on goods, services and entertainment; and (3) increases absences and decreases work productivity.
- Approximately 14% of all owners have incomes less than 80% of the median and pay over 30% of income for housing costs.
- Approximately 39% of all renters have incomes less than 50% of the median and pay over 30% of income for housing costs.
- All families need affordable housing for a stable household environment.
- Stable households provide stable children in schools and families in neighborhoods, a stable quality of life and stable demand for goods and services which drives the economy.
People usually raise a variety of concerns if they oppose new low-income housing developments. With an Affordable Housing development, there are likely to be multiple hurdles ranging from lack of enthusiasm to “Not In My Back Yard” (NIMBY) attitudes. These concerns are generally unfounded.
Today’s low-income housing is well-maintained, attractive, and safe for residents and neighbors. A number of studies conducted by housing experts confirm this statement. The following are some issues to consider:
- Property values: Factors such as neighborhood desirability, characteristics of particular housing units being sold, the overall area development, and prosperity has more to do with property values than a single affordable housing development. Contemporary affordable housing is attractively designed, professionally managed, and well-maintained. For these reasons it preserves its good appearance, usefulness and its value over time, and does not reduce the desirability of the surrounding area. Much of affordable housing is indistinguishable from market rate housing.
- Crime: Many of the affordable housing providers in the area carefully screen prospective tenants for criminal behavior. Much of the affordable housing developed today is managed carefully to reduce incidence of crime. It often helps reduce slum conditions by replacing deteriorated housing in concentrated areas.
- Traffic: Affordable housing developments are reviewed for traffic impacts exactly the same way as market rate housing. Studies show that potential residents of affordable housing developments own fewer cars and drive less than those in the surrounding neighborhood.
- Density: Affordable housing developments reduce overcrowded conditions by helping more people to live in attractive housing. Unlike overcrowded housing, higher density housing is designed to support more people by including amenities into developments.
Low Income Housing Tax Credits (LIHTC) is a Federal housing assistance program that provides tax incentives to owners of affordable housing. The program does not provide direct assistance to renters and is strictly used to finance the construction (not the operation) of rental properties. Usually, LIHTC properties have units available for families earning 60% or less of the Area Median Income (AMI). The rental properties are usually of very high quality and are often mistaken for luxury apartment communities. LIHTC is America’s most successful affordable housing program having created millions of affordable rental units since its inception in the late 1980’s.
Subsidized housing rental payments are reduced as a result of assistance provided by government, private enterprises, or individuals. Tenants pay less than the market rate for rent or for rent and services. Affordable Housing is generally defined as housing which the occupant is paying no more than 30 percent of gross income for housing costs, as defined by the US Department of Housing and Urban Development (HUD). Affordable housing provides residents with low cost housing for sale or rent. This form of housing is often provided by a housing agency to meet the needs of local people who cannot afford accommodations through the open or low-cost market, or subsidized housing.
Affordable Housing Glossary
Affordable Housing/households – Housing for which the occupants are paying no more than 30 percent of their income for gross housing costs, including utilities. These households generally have income less than 60 percent of AMI. However, the term has been applied more loosely to cover households with incomes up to 80% of AMI for renters and 100% of AMI for owner households.
Area Median Income – A benchmark which divides income distribution in a given area into two equal parts: one-half earn above this amount and one-half below. Affordable housing eligibility is generally based on income as compared to this benchmark. Area median income figures are calculated by household size by HUD on an annual basis for all metropolitan regions of the country and rural areas of states.
Assisted Housing – Any housing development which has received some form of public subsidy from local, state or federal sources, typically to support the creation of affordable housing units.
Density Bonus – An agreement to allow developers to increase the number of units beyond that which would normally be allowed under a specific zoning regulation, in exchange for setting aside a specific share of units affordable to people with low or moderate incomes.
Fair Market Rent (FMR) – The maximum rent which can be charged on a unit to meet either a 60% of AMI or 80% of AMI income maximum for an affordable unit. FMRs are determined annually by HUD and primarily used to determine payment standard amounts for housing assistance voucher programs and other housing assistance payment programs.
Housing Opportunity Fund – The City of Atlanta operates $40 million of Housing Opportunity Bonds that can be used to fund affordable and workforce housing development initiatives. The funds are used to finance loans for multifamily development, construction financing, rehabilitation, and down payment assistance for homeowners, development of affordable housing by eligible nonprofit developers, and the acquisition of land and vacant property for affordable housing development.
Incentive Zoning – Municipal and county planning ordinances that allow a developer to develop in a way that ordinarily would not be permitted in exchange for a public benefit that would otherwise not be required. This category includes density bonuses.
Inclusionary Zoning – Municipal and county planning ordinances that require a specific share of new construction be affordable by people with low to moderate incomes. This integration of affordable units into market-rate projects creates mixed-income communities, where households of different income levels have access to the same community services and amenities.
Land Use Restriction Agreement (LURA) – Often accompanies affordable housing incentive agreements to provide affordable housing by limiting the maximum rent that can be charged for a unit and requiring some or all of the units be made available to low-income households. These agreements are deed restricted and run with the land; if a development is sold during the life of the LURA the restrictions are binding upon the buyer. The initial compliance period is set at 15 years, with an additional 15 years for the extended use period.
Low Income Households – Defined by HUD as those households whose incomes are below the area’s median (do not exceed 80 percent of the median). This measure can be adjusted to account for family size. The US Census Bureau defines as 50% of AMI or less. Very Low Income Households do not exceed 50 percent of the median.
Moderate Income Households – Defined by HUD as those households whose incomes are near the area’s median (80 to 120 percent of the median). This measure can be adjusted to account for family size. US Census Bureau defines it as 80% of median.
Project-Based Rental Assistance (PBRA) – Housing developments in which the private owners have contracted with HUD to rent some or all of the units to low-income families. This differs from “tenant-based” rental assistance, which can be used to rent any private apartment that meets program guidelines.
Special Needs Population – Service-enriched housing developments for those who have special requirements for their housing. This can include the elderly, persons with physical, mental, or behavioral disabilities, persons with medical needs, and persons with alcohol or drug addictions.
Tax Allocation District (TAD) Affordable Housing Goals – In the City of Atlanta, TAD bonds can be used to fund affordable housing components and housing rehabilitation programs. In Atlanta, developers of TAD-funded residential projects are generally required to set aside 20% of units for people earning 80% of AMI. The Eastside TAD has assisted in the construction of 200 affordable condominiums and 160 affordable apartments.
Transit-Oriented Development (TOD) – A type of community development that includes a mixture of housing, office, retail and/or other amenities integrated into a walkable neighborhood and located within a half-mile of quality public transportation.
Vouchers – The Housing Choice Voucher program is administered by local public housing agencies on behalf of HUD to assist very low income families, the elderly, and people with disabilities. The agency pays a housing subsidy directly to the landlord; the participant pays the difference between the actual rent charged and the amount subsidized by the program. Participants are responsible for finding their own rental housing unit.
Workforce Housing/Households – Housing for those who earn too much to qualify for affordable housing programs, yet cannot afford the average market rate. These households generally have incomes between 60 to 120 percent of AMI.
Zoning Overlay – A zoning district applied over one or more previously established zoning districts, which sets for additional or stricter standards and criteria for the covered properties. These can be used to provide incentive zoning or requirements for affordable housing.
Developed by Sara Patenaude, PhD and Fonta High, LPC, NCC, MAC
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